Risk management isn’t just about stop losses — it starts with position sizing. If you’ve been through my Gamma masterclass, then you already know the 5% rule. It’s simple. Never risk more than 5% of your portfolio on any one position. That’s your max exposure — and it’s there to keep you in the game when things go sideways.
Now, does that mean every trade should be 5%? No. That’s the ceiling, not the floor. But if you want to trade like a pro, you need to size like one. Too many people go all-in on a single idea, then blow up when the market doesn’t cooperate. Maverick’s win rate is solid — about 80% or higher depending on the ticker — but even a high win rate won’t save you if your position size is out of control.
Why 5% Keeps You Alive
Let’s say you have a $100,000 portfolio. If you follow the 5% rule, that means your max capital allocation per trade is $5,000. That includes the full cost of the option, not just the premium. If you take a 20% loss, that’s $1,000 — painful but easily recoverable.
Go higher than 5%, and those losses stack fast. One bad trade at 20% exposure could wreck your month. Two in a row can kill your confidence and your account. That’s why sticking to 5% or less is critical — especially if you’re trading based on systems like Maverick that are highly effective but still need time to play out.
Use the Same Risk Rules as Gamma
The same sizing logic from Gamma applies here. Even though Maverick has a different entry style, the foundation is the same — don’t let one trade define your portfolio. Whether you’re in the Health Care (XLV) sector or chasing setups in Meta (META), you’ve got to stick to a size that lets you survive the losers so you can capitalize on the winners.
And remember — your job isn’t to be perfect. Your job is to be consistent. That starts with how much you risk every time you put on a trade. Use the 5% rule. No exceptions.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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